Oman free zones
- Oman has four Free Trade Zones (FTZ) i) Al Mazunah ii) Sohar iii) Salalah and iv) Duqm SEZ;
- Specific free zones benefits include i) 100% foreign ownership, ii) 10 years tax exemption iii) lower quota requirements for Omani workers (10%) and iv) zero customs duties;
- Oman free zones are suitable for foreign companies intending to use Oman as a regional manufacturing and distribution base. Free zones are mainly for import- and export-oriented companies who only require an office in Oman;
- Oman also has nine “Industrial Estates” offering some advantages including i) low rental and energy prices ii) customs duties exemptions and iii) a five-year corporate tax exemption. Knowledge Oasis Muscat allows for 100% foreign ownership for technology companies.
- FZ companies may be 100% foreign owned;
- There are no minimum share capital requirements for free zone business;
- There are no corporate taxes on free zone companies for ten years thanks to a tax holiday incentive;
- No duties are imposed on goods imported and exported from the free zone;
- Oman free trade zone companies are allowed to trade within Oman without a local agent. A customs duty of 5% applies in these cases.
- It is mandatory to rent premises within the free zone;
- At least 10% of the free zone company’s staff must be locals;
- Company licenses are renewable annually after FZ laws are complied with including submitting annual audited financial statements to the free zone authority;
- The free zones in Oman are still under construction and lack many of the conveniences available in the UAE free zones. Customer service is also poor.
Free zone activities allowed include i) importing raw materials ii) manufacturing iii) processing, assembling and packaging iv) exporting finished products v) storing or warehousing products.
- Established in 1999, Al Mazunah offers 100% foreign ownership and 30 years of tax free operations. If a large number of Oman nationals are hired, then this tax holiday may be extended indefinitely;
- Unlike the rest of Oman, where 30% of employees must be Omani nationals, an Al Mazunah company must only hire 10% locals.
- Yemeni citizens working for Al Mazunah companies do not require work permits, which is a great advantage considering that the free zone is located 4km from the Yemeni border in south west Oman;
- Suitable industries include light crafting, commercial sales, and services.
- Salalah opened in 2005 and is still under active development. Once finished with all four phases of development, it will cover an area of 19 square kilometers;
- The free zone is adjacent to the super hub port of Salalah on the main equatorial trade routes;
- The free zone is particularly suitable for chemical and material processing, manufacturing and assembly, and logistics and distribution;
- Licenses offered are for i) general trading, which allows the holder to import, export, distribute and store all goods; ii) specialized trading of defined products, iii) services, and iv) industrial applications, for the import of raw materials, manufacturing of specified products and export of finished products;
- The benefits of this zone include i) 30-year tax holidays on profits and dividends, ii) 0% corporate tax iii) 0% personal income tax iv) no customs or exercise duties.
- The Sohar port free zone is still under development. Once finished it will be 4,500 hectares on the Sohar Port. The port will cluster business into the following industries: i) steel manufacturing and processing, ii) trade and logistics, iii) oil and gas, iv) petrochemicals, v) minerals and aggregates industry, vi) ceramics, vii) food logistics and food processing;
- Licensing can be i) industrial licensing, ii) light manufacturing and assembly, iii) logistics and iv) general trade;
- It will offer 100% foreign ownership and 10 years of tax free operations. If a large number of Oman nationals are hired, then this tax holiday may be extended indefinitely;
- The free zone authorities boast “one-stop-shop” incorporation procedures, shortening business setup to under three weeks, making a Sohar company registration worth considering.
- When completed, the Duqm SEZ will be one of the biggest economic zones in the Middle East, with an area of 1,745 square km;
- The zone area is divided into eight sub-zones aimed at different type of investments, such as i) industry ii) sea port and dry dock iii) tourism iv) fisheries v) logistics, etc.
- The Zone will count with a port and an airport, which will benefit export oriented companies that invest in the area.
Comparison of freezones
|Oman Free Trade Zones||Al Mazunah FZ||Salalah FZ||Sohar FZ||Duqm SEZ|
|Area covered by the free zone?||4.5 sq. km||6 sq. km||45 sq. km||25 sq. km|
|Most popular business sector in the zone?||Light industries||Manufacturing and logistics||Petrochemicals and logistics||Light industries and logistics|
|Our Clients can setup a WFOE in the zone?||Yes||Yes||Yes||Yes|
|Bonded warehouses available?||Yes||Yes||Yes||Yes|
|Can hire foreign workers?||Yes||Yes||Yes||Yes|
|Can secure offshore corporate finance?||Yes||Yes||Yes||Yes|
|Can a FTZ company freely remit money abroad?||Yes||Yes||Yes||Yes|
|Can trade with other parts of Oman?||Yes||Yes||Yes||Yes|
|Time zone? (ahead of GMT)||+4 hours||+4 hours||+4 hours||+4 hours|
|Is there an airport nearby?||Yes||Yes||Yes||Yes|
|Can the company be incorporated online?||No||No||No||No|
|How long to setup the company?||6 weeks||6 weeks||6 weeks||6 weeks|
|How long to secure the business license?||4 weeks||4 weeks||4 weeks||4 weeks|
|Foreign investor approval required?||Yes||Yes||Yes||Yes|
|Client must travel to Oman for company registration?||No||No||No||No|
|Minimum statutory paid up capital requirement?||20% of initial investment||20% of initial investment||20% of initial investment||20% of initial investment|
|Physical office space required for new companies?||Yes||Yes||Yes||Yes|
|Quality of utilities?||Excellent||Excellent||Excellent||Excellent|
|Average annual industrial space rental per 1000sq. m.?||US$2,650||US$2,300||US$2,750||US$3,100|
|Average annual warehouse space rental per 1000 sq. m.?||US$2,600||US$2,200||US$2,500||US$3,000|
|Attractive for setting up a manufacturing business?||Yes (light manufacturing)||Yes (manufacturing & assembly)||Yes (light manufacturing)||Yes (light manufacturing)|
|Quality of Wi-Fi?||Good||Good||Good||Good|
|Average monthly electricity prices? (per Kwh)||US$0.026||US$0.025||US$0.03||US$0.026|
|Proximity of sea port in kilometres?||260km||5km||10km||9km|
|Proximity of airport in kilometres?||260km||18km||25km||20km|
|Accounting and tax considerations|
|Corporate tax rate (%)?||0%||0%||0%||0%|
|Goods subject to custom duties within the zone?||No||No||No||No|
|VAT imposed on transactions within the zone?||No||No||No||No|
|VAT imposed on goods sold in the mainland from 2018?||5%||5%||5%||5%|
|Tax incentives for manufacturing start-ups?||Yes||Yes||Yes||Yes|
|Quarterly tax filing required?||No||No||No||No|
|Annual tax returns to be submitted?||Yes||Yes||Yes||Yes|
|Annual government inspection required?||Yes||Yes||Yes||Yes|
|Annual audit required?||Yes||Yes||Yes||Yes|
|Access to double taxation avoidance agreements?||Yes||Yes||Yes||Yes|
|Corporate banking and financial considerations|
|Recommended bank for corporate banking?||National Bank||HSBC||Oman Arab Bank||Bank Muscat|
|How long to setup the bank account?||4 weeks||4 weeks||4 weeks||4 weeks|
|Corporate visa debit cards available?||Yes||Yes||Yes||Yes|
|Quality of e-banking platform?||Good||Very Good||Good||Good|
|English e-banking platform available?||Yes||Yes||Yes||Yes|
|Can companies make overseas payments in OR/USD?||Yes||Yes||Yes||Yes|
|Can companies secure loans within the zone?||Yes||Yes||Yes||Yes|
|Can secures loans from mainland Oman banks?||Yes||Yes||Yes||Yes|
|Access to Private Equity/VC funds?||Yes||Yes||Yes||Yes|
|Can the company list on the Muscat securities market?||Yes||Yes||Yes||Yes|
|Can hire foreign employees?||Yes||Yes||Yes||Yes|
|How long to secure the work permit?||4 weeks||5 weeks||4 weeks||6 weeks|
|Client must travel before securing a work permit?||Yes||Yes||Yes||Yes|
|Can investors secure a permanent residency?||Yes||Yes||Yes||Yes|
|Average monthly salary for local employees?||US$4,000||US$4,000||US$4,000||US$4,000|
12 steps to setting up a free zone company
Frequently asked questions
Will I have to hire Omani citizens when I establish an Oman free zone company?Yes. At least 10% of the Omani free zone entity staff must be local hires, although this is lower than on the mainland.
What will be the benefits if I start free zone companies in Oman?Free zone companies offer several benefits including i) 100% foreign ownership ii) no minimum share capital requirements iii) no custom duties on goods entering/leaving the zone and iv) no corporate taxes for 10 years.
How many directors will I be required to appoint in order to register in an Omani FZ?Only 1 director is required for Oman FZ company formation.
How many shareholders are required to incorporate in Oman FZ?Only 1 shareholder is required for starting a free zone business in Oman, whereas other companies in Oman require at least two shareholders.